Krispy Kreme

Krispy Kreme is a chain of doughnut stores. Its parent company is Krispy Kreme Doughnuts, Inc. (NYSE: KKD), based in Winston-Salem, North Carolina, United States.

Krispy Kreme sells doughnuts, among them glazed doughnuts, served warm. Krispy Kreme doughnuts are sold in supermarkets, grocery stores, convenience stores, gas stations, Wal-Mart and Target stores in the US; Loblaws supermarkets and Petro-Canada gas stations in Canada; and Tesco supermarkets and Tesco Extra in the UK.

The company's growth was steady prior to its initial public offering but profits have decreased in recent quarters.^[2]

Most dedicated Krispy Kreme stores are constructed with a short window between the customer area and the kitchen allowing patrons to watch the doughnut making machines. The machines produce rings of dough, raise yeast, bake, deep-fry, flip, and glaze the doughnuts. These stores have a neon sign that, when lit (usually morning and evening), tells customers that hot doughnuts are coming off the line. Some smaller locations bring doughnuts from other locations. Krispy Kreme's competitors within the US include Dunkin' Donuts, Starbucks, and Winchell's.^[3]

History

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Krispy Kreme delivery truck, circa 1939

An assortment of doughnuts on display in a shop in Washington, D.C..

The founder, Vernon Rudolph, worked for his uncle, Ishmael Armstrong, who purchased a secret recipe for yeast-raised doughnuts and a shop on Broad Street in Paducah, Kentucky, from Joseph LeBeouf of Lake Charles, Louisiana. Rudolph began selling the yeast doughnuts in Paducah and delivered them on his bicycle. The operation was moved to Nashville, Tennessee, and other family members joined to meet the customer demand. The first store in the nation with the Krispy-Kreme name opened on Charlotte Pike in 1933^[4]. Rudolph sold his interest in the Nashville store and in 1938 opened a doughnut shop in Winston-Salem, and began selling to groceries and then directly to individual customers. The first store in North Carolina was located in a rented building on South Main Street in Winston-Salem in what is now called historic Old Salem. The Krispy Kreme logo was designed by Benny Dinkins, a local architect.

By the 1960s, Krispy Kreme was known throughout the southeastern United States, and it began to expand into other areas.

A Krispy Kreme store in Atlanta, Georgia with the Hot Doughnuts sign on.

In 1976, Krispy Kreme Doughnut Corporation became a wholly owned subsidiary of Beatrice Foods of Chicago, Illinois. The headquarters for Krispy Kreme remained in Winston-Salem.

A group of franchisees purchased the corporation back from Beatrice Foods in 1982.

A location in Eden Prarie, closed as of February 21, 2008, along with all Minnesota, USA locations

In 2003, a pilot project in Mountain View, California, to sell doughnuts through car windows and sunroofs at a busy intersection (with wireless payment) failed.

On June 3, 2005,Mike made donuts National Doughnut Day in the US, participating franchises gave away free doughnuts.

On February 19, 2007, Krispy Kreme began selling the Whole Wheat Glazed doughnut in an attempt to appeal to the health conscious. The doughnut has twenty calories (83,736 J) fewer than the original glazed (180 vs. 200 kcal) and contains more fiber (2 grams vs. 0.5 grams). As of January 2008, the trans fat content of all Krispy Kreme doughnuts was reduced to 0.5 of a gram or less. The U.S. Food and Drug Administration, in its guidelines, allows companies to round down to 0 g in its nutrition facts label even if the food contains as much as 0.5 of a gram per serving. Krispy Kreme benefited from this regulatory loophole in its subsequent advertising campaign, touting its doughnuts as "trans fat free" and having "0 grams trans fat!".^[5]

Growth

Krispy Kreme began another phase of rapid expansion in the 1990s, opening stores outside the southeastern United States where most of their stores were located. Then, in December 2001, Krispy Kreme opened its first store outside the U.S. in Mississauga, Ontario, Canada, just outside Toronto. Since 2004, Krispy Kreme has rapidly expanded its international operations.

On April 5, 2000, the corporation went public on the NASDAQ using the ticker symbol KREM. On May 17, 2001, Krispy Kreme switched to the New York Stock Exchange, with the ticker symbol KKD, which is its current symbol.

On January 18, 2005, Krispy Kreme announced Stephen Cooper, chairman of financial consulting group Kroll Zolfo Cooper LLC, as interim CEO. Cooper replaces Scott Livengood, who the company said has retired as chairman, president, CEO and a director. The company also named Steven Panagos, a managing director of Kroll Zolfo, as president and COO.^[6]

Although based on informal advertising such as word-of-mouth, in 2006, Krispy Kreme moved into television and radio advertisements, beginning with its "Share the Love" campaign with heart-shaped doughnuts.^[7]

Problems

A Krispy Kreme customer wearing the signature garrison cap

New England

In 2002, Krispy Kreme opened its second store in New England (the "home turf" of competitor Dunkin' Donuts) in Newington, Connecticut. What followed was a period of aggressive expansion throughout the region, followed by the closing of all but two stores,one in Uncasville and the Milford store, the first store to open in the region. Some say that Krispy Kreme's coffee "left many locals unimpressed, a mortal sin in the joe-loving Hub."^[8]

After opening one store in Cranston, Rhode Island, the Janikie Company eventually closed it, due to lack of interest from Dunkin' Donuts’ customer base.

Arizona and New Mexico

On August 11, 2006, all eleven Krispy Kreme stores in Arizona and New Mexico were closed when Rigel Corporation, the franchisee responsible for Krispy Kreme stores in these states, filed for bankruptcy. There was no statement from Rigel's corporate offices regarding the closures. The closing was controversial because store owners did not provide any warning of the closing to their employees, except to an undisclosed number who were notified the day before.^{[citation needed]} The total number of employees affected is not known, but a local report indicated 55 employees were without work just in Tucson, Arizona.

Krispy Kreme reentered the Arizona market when a new franchise reopened its East Mesa, Arizona, location on May 13, 2008. This location was purchased by Krispy Kreme after Rigel closed it in 2006. The new franchise owner, Dan Brinton, plans to eventually open four to five factory stores in the Phoenix market. These stores are planned to support 10 to 15 smaller non-factory stores that will only sell doughnuts and other products.^[9]

Texas

In 2002, Krispy Kreme opened a restaurant style store in the Amarillo area in Texas. But the loyalty of Amarilloans to a local doughnut and sweet roll company called The Donut Stop drove Krispy Kreme from the area. The Amarillo Krispy Kreme closed on July 17, 2005.^[10]

After Krispy Kreme closed the Amarillo store, Wal-Mart, and Toot n Totum convenience stores continued to carry Krispy Kreme donuts in the Amarillo area. But by early 2009 Krispy Kreme donuts had become unavailable to Amarilloans.

California

In January 2006, Krispy Kreme terminated the franchise license of Great Circle Family Foods LLC, alleging non-payment of required fees.^[11] At the time, they were one of the largest franchisees, operating 28 stores in Southern California. Preceding this action was a financial dispute by Great Circle, culminating in their September lawsuit filed against Krispy Kreme. The lawsuit was settled in July 2006 and led to the reinstatement of Great Circle's license.^[12]

On August 22, 2007, Great Circle Family Foods and some of its wholly owned subsidiaries filed for Chapter 11 Bankruptcy.^[13]

Pennsylvania

On July 16, 2008, Sheetz, a convenience store chain based in Altoona, PA, quit buying Krispy Kreme doughnuts because of the opening of its own kitchen. As a result of this, on December 14, 2008, the Krispy Kreme store located in Altoona closed its doors without warning. Sheetz was one of Krispy Kreme's largest consumers.

Canada

The 18 stores which opened in Canada, out of 32 planned, have been reduced to five. Three of those exist in Quebec (in Laval, Greenfield Park, and Quebec City) while the other two stores are in Mississauga, Ontario and Delta, British Columbia. Krispy Kreme's Canadian assets were put up for sale in 2005 seven weeks after the U.S.-based doughnut company had the firm that owns and operates stores in Canada placed under bankruptcy protection.^[14]

Hong Kong

A Krispy Kreme store at Times Square, Hong Kong

Krispy Kreme Hong Kong opened its first store in September 2006, and had 6 stores at its peak. Nevertheless, it went into liquidation on 27 October 2008.

International operations

Inside a Krispy Kreme store in Portsmouth, England

Main article: Krispy Kreme operations by country

Besides the stores that Krispy Kreme operate in the United States and Canada, there are also franchise owned stores in the United Kingdom, Australia, Kuwait, Mexico, Puerto Rico, South Korea, Hong Kong (2006-2008), Indonesia, the Philippines, Japan, the United Arab Emirates, Qatar, Saudi Arabia, Lebanon (2008) and Bahrain. The first Krispy Kreme store to open outside North America was in Sydney, Australia.^[15]

Krispy Kreme doughnuts being made at a restaurant in Sydney, Australia

International Krispy Kreme store openings have continued to draw crowds. The latest Krispy Kreme stores to open in Australia, at the Queen St. Mall in Brisbane City in April 2008, has proven to be very popular with long queues at all hours and people camping out on the first day of the opening.^[16] On Saturday, July 5th, 2008, Krispy Kreme opened its doors in the Pacific Fair Shopping Centre on the Gold Coast. In 2009, two Krispy Kreme outlets opened at the BP Service Centre on the Bruce Highway, Caboolture.

Krispy Kreme opened its first store in Malaysia on the 27th April 2009 at Berjaya Times Square.

Krispy Kreme opened its first store in Turkey at Baghdad Street, Istanbul, and it has reached a large base of customers in a relatively short time.

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